newswire: 7/11/2020
- Three months into the pandemic, Americans are continuing to spend much less on travel and leisure, but are spending more on home improvement. With many businesses still closed and vacations cancelled, families are pouring money into upgrading their homes with new furniture and fixtures. (The Wall Street Journal)
- NH: The pandemic has caused an epic decline in US retail sales. Despite an increase in sales MoM from April to May, sales for May YoY were down -6.1%.
- But even with retail suffering, there are still relative losers and winners. According to a Census report, the biggest relative losers are clothing/accessories stores (-63.4% YoY) and gas stations (-30.8% YoY). The biggest relative winners are home improvement stores (+16.4% YoY) and grocery stores (+14.4% YoY). MasterCard data shows home improvement and grocery stores both up over 25% for the beginning of June. See chart below.
- Why have clothing stores done so badly? For one, people are staying home and not seeing each other. Not being around other people means there is no one to impress nor a dress-code to abide by. Another reason is that clothes are not traditionally bought online. People want to try on items before purchasing. If they can't do that, they will simply wait until they can.
- Why have home improvement stores done so well? The reason is an acceleration of our long-discussed trend of intergenerational living. See “Does Co-Living Threaten the U.S. Housing Market?” While the share of households with different age adults living together has been growing for years (even at the height of economic expansion), the pandemic has put this trend in fast-forward. Many young adults living in cities have lost their jobs and moved back in with their parents. With an increasing household size, Boomers and Xers, with money and time to spare, are remodeling their homes to fit the needs of their new housemates. Perhaps a new basement kitchen for the Prodigal Son? See “Home Remodeling Flexes Its Muscles.”
DID YOU KNOW?
- Tourists Wanted. It’s no secret that COVID-19 has hit the travel industry hard. But as the Financial Times reports, behind the cancelled flights and empty hotel rooms is a broader backdrop: the economies of the countries that rely on tourism. Europe, the world’s top tourist destination, would normally be enjoying its peak summer season; as much as 10% of Europe’s economic activity relies on tourism. In individual countries, it’s even higher: Tourism accounts for more than 20% of the GDP in Croatia and Greece, 15% in Spain, and around 13% in Italy. Many of these tourist-starved countries are desperate to lift travel restrictions and welcome visitors back, even if it means risking a second wave of the virus. Travel operators are heavily advertising new safety measures, but business remains slow. In Greece’s Santorini, for instance, bookings are down 80% for July—mainly due to the EU’s continued ban on visitors from the island’s three biggest markets: the United States, China, and Russia.
